UGANDA REVENEUE AUTHORITY V RABBO ENTERPRISES U LTD & MT. ELGON HARDWARES. CIVIL APPEAL NO. 12 OF 2004 (SUPREME COURT)
On 10th July, 2017, The Kampala Law Monthly Magazine and the entire legal fraternity learnt that the Supreme Court of Uganda settled the ever confusing position on the scope and applicability of the unlimited original jurisdiction of the High Court to handle tax matters. Court held that the High Court does not have unlimited original jurisdiction to handle tax disputes and it only handles appeals from the Tax Appeals Tribunal.
Rabbo Enterprises and Mt. Elgon Hardwares (Respondents) sued the Commissioner General of URA in the High Court for recovery of trade goods and commercial trucks seized by the appellant and her agents. The High Court Judge, Hon. Judge. Okumu Wengi raised a concern about the nature of the case before him and held that since the High Court was not a Tax Tribunal; the dispute should have been first presented before the Tax Appeals Tribunal. That the High Court only deals with appeals from the Tribunal, the High Court held. The respondents further appealed to the Court of Appeal. The essence of the appeal was to overturn the decision of the trial judge.
Court of Appeal Decision.
The Court of Appeal found that the legal basis of the Jurisdiction of the High Court is basically found in Article 139 of the Constitution and S.16 (1) of the Judicature Act. That both laws confer on the High Court with unlimited original jurisdiction in all matters. This meant that the original jurisdiction of the High Court can only be changed by amending the Constitution. The Court of Appeal further found that the mere fact that the Tax Appeals Tribunal was set up in compliance with Article 152(3), does not give that Act any power to override a provision of the Constitution. That the conferment of appellate jurisdiction on the Tax Tribunal by S.27 of the Tax Appeals Tribunal Act over decisions of tax cases has no effect on the original jurisdiction of the High Court conferred by Article 139(1).
This meant that a party who is aggrieved by the decision of the tax authorities on tax matters may either choose to apply to the Tax Appeals tribunal for review or file a suit in the High Court to redress the dispute, that court cannot chase him/her away. The choice is his or her hers, once he or she goes direct to the High Court, that court should hear his/her case but not dismiss the case for want of original jurisdiction.
The Court of Appeal concluded by holding that the dispute in question was not a tax despite but rather an ordinary tort hence it could not first filed before a Tax Tribunal.
URA being dissatisfied with the decision of the Court of Appeal preferred an appeal in the Supreme Court, on two grounds namely;
- That the Court of Appeal erred when they held that the matter was an ordinary tort and not a tax matter.
- That the Court of Appeal erred in law when they found that the High Court had original jurisdiction to determine tax matters.
The Position of the Law;
Do the actions of URA to seize Goods amount to a strict Tort or a Tax Dispute?
The Supreme Court held, in the lead Judgment by Prof. Lillian Tibatemwa-Ekirikubinza that the actions of URA of seizing the vehicles and goods of the respondents arose out of a tax dispute and this was not a tort. It was the reasoning of the Highest Court of the land that the dispute between the parties arose out of an attempt by URA to use powers granted to it by statute and of which the respondent denied liability. That such questions would involve interpretation of tax law, which is as to whether or not an entity owes tax money involves tax assessment and tax decisions. The learned Justice further stated that even where URA is found to have erred in its assessment and subsequent decisions, such error does not amount to a tort.
In conclusion on this issue court held that the seizure of such goods arose out of a tax assessment on the imported goods and it was an error by Court of Appeal to hold that such acts arose out of a tort.
Does High Court have Original Jurisdiction to Handle Tax Disputes?
The Supreme Court overturned the decision of Court of Appeal and held that High Court does not have unlimited original jurisdiction in handling tax disputes.
But what was the legal reasoning behind this position of the law as redefined by the Highest Court of the Land?
The Supreme Court relied on Articles, 139, 152 of the Constitution and S.14 of the Tax Appeals Tribunal Act. That the High Court exercises its unlimited jurisdiction subject to other provisions of the Constitution. It was the finding of the Court that the establishment of the Tax Tribunals is rooted in the Constitution and such entities are given powers to handle taxation disputes.
The learned Justice reasoned that;
“I therefore respectfully disagree with the conclusion and reasoning of the Court of Appeal to the effect that a finding that a tax dispute should start with the Tribunal and only go to the High Court as an appeal would tantamount to an Act of Parliament taking away the Constitutionally given powers of the High Court. It is the Constitution itself which through Article 152(3) limits the Original jurisdiction of the High Court and empowered the Tribunals with jurisdiction. The powers of the High Court are subject to the Constitution.”
In further disagreement with the learned Justices of Court of Appeal, the Supreme Court relied on the position that by virtue of the qualifications of the persons who preside over the Tribunal matters, they are qualified to be Judges of the High Court, that is by operation of S.3 of the Tax Appeals Tribunal Act. That given the above state of affairs, it would be bizarre if the law realistically permitted a litigant to pursue any of the two- either High Court or the Tribunal where both institutions (High Court & Tribunal) are equally qualified to handle the matter. That in any case the proceedings before the Tax Tribunal are treated as judicial proceedings as per Sections 19 and 21 of the Tax Appeals Tribunal Act. That the High Court cannot be clothed with dual jurisdiction, that is both original and appellate in respect of the same matters, where another forum was established to handle the same as original jurisdiction. Court concluded this issue by holding that the proper procedure is that all tax disputes must first be lodged with Tax Appeals Tribunals and only taken before the High Court on appeal.
Supreme Court Departing from its previous Decision.
Article 132 (4) of the Constitution allows the Highest Court of the land to depart from its previous decision. In fact the Supreme Court is not bound by its previous decision, but if it is to do depart from the same, there are circumstance and reasons for that. While distinguishing the previous Supreme Court decision by Rtd. Justice Kanyeihamba J.S.C in his lead judgment in URA v Meera Investments C.A. N0.22 of 2007 where he held that there was no need for the Meera case to be presented before the Tax Appeals Tribunal, because the Tribunal was not clothed with such jurisdiction to entertain it on grounds that;
- The Meera case was about the conflict between the provisions of the Income Tax Act and the Value Added Tax Act, and the interpretation of such a nature was a matter of court of law and not a tax appeals tribunal.
- That the Meera case was based on a tax payer challenging URA’s powers to impose tax on property but not challenging tax assessment and whether the same was fair.
However the learned Justice of the Supreme Court took note of the disastrous nature and implication of the jurisprudence in Meera on several grounds and interesting points, among others that;
- Kanyeihamba JSC in Meera did not discuss the meaning of the phrase “Subject to the provisions of this Constitution”, as found in Article 139(1) of the Constitution, which phrase according to the learned Justice places the powers of the High Court within the wider context of the Constitution.
- That the learned Justice did not address his mind to the cardinal rule of law and principles of Constitutional interpretation.
- The same lead judgment in Meera was based on a Court of Appeal decision, the judgment of Okello JA in Rabo Enterprises U Ltd v URA N0.55 of 2003. And this was the very case that went on Appeal before the Supreme Court.
Because of those identified lapses, the learned Justice respectfully criticized the earlier Supreme Court decision in Meera decision and Supreme Court departed from its previous decision on grounds that the Meera case was with due respect decided per incurium.
In conclusion the Supreme Court allowed the appeal and subsequently set aside the Court of Appeal judgment, no costs were awarded as counsel for the appellant Mr. Ali Sekatawa did not pray for costs. It was also held that the High Court does not have original Jurisdiction in Tax disputes, but such jurisdiction is ordinarily a preserve of the Tax Appeals Tribunal and appeals from it lie before the High Court.
The legal fraternity has welcomed the above jurisprudence with varying reactions and analysis. (In our subsequent articles and magazine publications The Kampala Law Monthly Magazine shall bring you the legal analysis and implications of this landmark decision, by seasoned lawyers and scholars).
However worth to note is the scope and implication of this case, it appears that the Supreme Court has redefined the position of the law and scope of the original jurisdiction of the High Court not only in tax disputes but in general matters that require to first be placed before a forum which is established by an Act of Parliament. Where does this leave such other quasi-judicial bodies that are presided over by judges with similar qualifications, must all such disputes be first filed before such forums? A critical look at the Employment matters offers a logical and conclusive answer similar to this jurisprudence. All labour matters are lodged before the Industrial Court by way of appeal from the labour officer by virtue of Sections 93 and 94 of the Employment Act, this makes the Industrial Court to have concurrent jurisdiction with the High Court, the legal implication of this is that an appeal from Industrial Court does not lie with the High Court but rather with the Court of Appeal as per S.22 of the Labour Disputes (Arbitration & Settlement) Act, 2006.
However the Kampala Law Monthly Magazine is quick to note that situation of Industrial Court is unique and far different from the rest like the Tax Appeals Tribunal. Logically by its composition, it is composed of two judges and other representatives as per S.10 of Labour Disputes (Arbitration & Settlement) Act, this partly explains why such appeals from the Industrial Court lie before the Court of Appeal and not before a single High Court Judge to overturn the decision of two High Court judges sitting at the Industrial Court with other representatives or members.
The Big Question?
Is the Supreme Court decision of URA v Meera Investments C.A. N0.22 of 2007 still “Good law”? A critical analysis of the Rabbo Supreme Court decision seems to present two contradicting positions;
- The learned Justice of Supreme Court at first, in her judgment at page 18 did clearly distinguish the Meera case from the present Rabbo case, and indeed went ahead to acknowledge the fact that Meera was decided on different facts and that the High Court has unlimited original jurisdiction in all matters which still remains the superior and mandatory position. This alone was enough to dispose of the appeal, for the two cases were distinguishable as the learned Justice ably did with great elaborate insight and intellect.
- But to leave no stone unturned, the learned Justice went an extra mile to develop another insightful jurisprudence by holding that the Meera decision was decided per incurium, and the current decision in Rabbo stands as the good law.
For any scholar, it appears like this Rabbo decision did not totally and wholly over rule the Meera decision, basing on peculiar circumstances, Meera decision still remains good law based on its facts and in its context. This Rabbo decision is welcomed because the Supreme Court had to define the wider scope of such jurisdiction, which was not the question in Meera. Should a similar scenario arise like that in Meera, it is predictable that any court be it this same Supreme Court will follow the same Meera decision, because it was not about Tax assessment, decision, neither was the dispute an inherently and potentially a tax dispute though it was about High Court’s original jurisdiction.
In conclusion it appears that the unlimited original jurisdiction of the High Court and its powers were not amended by Section 27 of the Tax Appeals Tribunal neither this the same Act and Article 152(3) of the Constitution oust the unlimited original jurisdiction of the High Court, but rather the Constitution itself trimmed off the same powers it gave to the High Court and donated them to another forum, which is the Tax Appeals Tribunal by virtue of Articles 139(1) and 152(3). The key phrase being “subject to the provisions of this Constitution” as provided for under Article 139(1).
This puzzle was ably solved by the learned Justice of the Supreme Court by invoking the cardinal rules of Constitutional interpretation to give life and meaning of the phrase “subject to the provisions of this Constitution.” Thereby harmonizing the Constitutional provisions and not reading each proviso in isolation of the other, hence coming to such a wonderful and insightful judgment.
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